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PreMarket Prep Recap: More Pain In The Retail Sector, Stalemate Ahead Of Fed Announcement

Joel Elconin

A range bound market ahead of the Federal Reserve meeting was predicted on today's PreMarket Prep Show and so far, the market has not disappointed us.

Fed Won't Move Rates, But What Is Their Tone?

On most Fed decision days, the stock indexes trade in a tight range ahead of the announcement and then get volatile once the announcement is made.

With a strong jobs number last Friday, no one is expecting a rate cut. It also would be a drastic reversal from it prior rate reduction. What the Street will be interpreting from Jerome Powell's speech is willingness to hike rates in 2020 based on his outlook for inflation.

At this time, the S&P 500 index futures have found resistance at Tuesday's highs (3143) and traded for a majority of the session around Tuesday's closing price (3136.00).

Long-Term Downtrend In GameStop Resumes

After the close on Tuesday, GameStop (NYSE: GME) announced a big EPS and sales miss and slashed 2019 EPS guidance.

The issue, which had been riding the coattails of "Big Short" investor Michael Burry who announced a long stake in late August, is under selling pressure in today's session. In fact, it's taking back a good chunk of its run since Burry's investment since its August low ($3.15) to recent peak on Monday at $6.92.

Neither of the hosts of the show showed any interest in going long the issue at any price after such a poor report. For those looking for support on the daily charts, the trio of lows at $5 area from late September is an area that may attract some buying interest. At this time, $5.18 stands as the low for the session and it's attempting to recover.

American Eagle Wounded After Mixed Report, Lower Guidance

For investors looking for a rebound in mall stocks, if the price action in American Eagle Outfitters (NYSE: AEO) following its report is any indication, do not expect that to happen anytime soon. Before the open, the company announced an inline EPS and a slight beat for sales. However, EPS guidance was below Wall Street estimates.

As a result, the issue is deep in the red in today's session. Both hosts of the show identified the same level as a critical one to hold off the open and that was Sept. 4 low at $13.66.

Off the open, buyers elected to buy ahead of that key level as it immediately bottomed at $13.78 and has climbed into the $14 handle.

Gil Morales Joins The Show

Midway through the show, Gil Morales, author of The Gilmo Report and Managing Director of Moka Investors joined the broadcast. He shared his short- and long-term outlook for the market and identified issues on his buy and sell radar.

In a bonus hour of coverage, Sean Udall, CIO of Quantum Trading Strategies joined me to cover a variety of issues. Many of which came from out listening audience.

Also during the extended hour Robin Deshayes, President and Chief Investment Officer of Miltonian Capital Management provided insight commentary on the recent news regarding PG&E Corp (NYSE: PCG).

On Thursday's show, Marc Chaikin of Chaikin Analytics will provide updates on his Money Flow Indicator for several issues.

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